Correlation Between KNOT Offshore and Wingstop
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Wingstop at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KNOT Offshore and Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KNOT Offshore Partners and Wingstop, you can compare the effects of market volatilities on KNOT Offshore and Wingstop and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KNOT Offshore with a short position of Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Wingstop.
Diversification Opportunities for KNOT Offshore and Wingstop
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KNOT and Wingstop is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop and KNOT Offshore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KNOT Offshore Partners are associated (or correlated) with Wingstop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wingstop has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Wingstop go up and down completely randomly.
Pair Corralation between KNOT Offshore and Wingstop
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Wingstop. In addition to that, KNOT Offshore is 1.31 times more volatile than Wingstop. It trades about -0.02 of its total potential returns per unit of risk. Wingstop is currently generating about 0.08 per unit of volatility. If you would invest 14,284 in Wingstop on August 31, 2024 and sell it today you would earn a total of 18,593 from holding Wingstop or generate 130.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Wingstop
Performance |
| Timeline |
| KNOT Offshore Partners |
| Wingstop |
KNOT Offshore and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Wingstop
The main advantage of trading using opposite KNOT Offshore and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Wingstop can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wingstop will offset losses from the drop in Wingstop's long position.| KNOT Offshore vs. USA Compression Partners | KNOT Offshore vs. Dynagas LNG Partners | KNOT Offshore vs. Crossamerica Partners LP | KNOT Offshore vs. Delek Logistics Partners |
| Wingstop vs. RLJ Lodging Trust | Wingstop vs. Aquagold International | Wingstop vs. Stepstone Group | Wingstop vs. Morningstar Unconstrained Allocation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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